In New York, a caution for communities on granting property tax exemptions

The New York state comptroller is cautioning localities in his state about extending more tax exemptions to groups in a report he issued this week on property taxes.

State Comptroller Thomas P. DiNapoli's report found that more than 25 percent of real property value in New York is exempt from county, city and town property taxes. The total value of these exempt properties is $680 billion. The value increases to $826 billion for properties exempt from more than one type of local government or school district taxes.

Across New York, DiNapoli’s report noted the percentage of exempt property value ranges from less than 10 percent in several municipalities to more than 60 percent in others.

Related articles

Towns have the greatest variation in terms of total exempt property value in the state, ranging from 1 percent in some communities to nearly 90 percent in others. However, many of the towns with a high percentage of exemptions are smaller communities with special circumstances. For example, the town of Alfred in Allegany County has two large universities; the towns of Harrisburg and Martinsburg in Lewis County both provide multiple exemptions for solar and wind projects. Other examples include exemptions provided for state prisons, power plants, Native American reservations and federal military bases.

The report noted that exemptions generally fell into several categories, with nonprofit organizations totaling 14 percent ($112 billion) of New York’s exempted property value. The largest group for exemptions was government-owned property (federal, state, local and foreign governments), which accounts for 41 percent, or $343 billion, of the total value of exempt property in the state.

DiNapoli reports that to offset these tax exemptions, local governments have taken a number of steps to generate revenue from exempt property owners. This includes charging fees for services, developing payments in lieu of taxes, or PILOT arrangements, and reaching voluntary payment arrangements with non-profit groups.

For example, in 2012, 51 percent of the property value (nearly $5 billion) in the city of Syracuse was tax-exempt. To help make up for the lost revenue, the city has reached service agreements with Syracuse University and two local hospitals.

DiNapoli said, “In localities with higher exemptions, taxable property owners are often carrying a much higher burden. Local leaders will need to continue to find creative ways to offset these exemptions and must carefully weigh any decision to offer new exemptions. Syracuse is attempting to tackle this challenge head on and others can learn from its example."